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Plan to Win
Achieving business agility in the age of urgency
This book is an urgent call for organizations of all shapes and sizes to adapt the way they create, plan, and execute operational strategies in response to a rapidly changing environment.
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The budget model is where the rubber hits the road in FP&A financial modeling. By taking the financial plan you’ve carefully crafted and applying it to the messy realities of all your different departments you’re able to better predict what’s really important in your business. It’s ironic then that many FP&A teams still try to manage such an important, complex process manually.
Moving Beyond Manual Financial Modeling
Budget forecasting models help Finance understand the company’s performance based on input from its various components. As each program, department, and business unit creates its own budget, you can then roll them up into a single overall financial model for the entire business. This model can then be used to allocate resources and predict financial results for the coming year.
Simple in theory, but when done manually, it can be complex in practice:
- It can take hours or days to send information and spreadsheets out, have business managers make edits, and then readjust the model
- Finance often has to decipher the changes that were made and make sure the new information gets put in the right places
- Finance teams inherit models or need to rebuild models, which can be extremely time-consuming to understand and recreate
- With some budget models encompassing thousands of spreadsheets, it’s a constant struggle to maintain links, eliminate errors and keep all the information together
While budget modeling is crucial to the company’s success, Finance often gets stuck in the middle managing and coordinating the whole process. Individual business managers drag their feet getting you what they need, either because they don’t see the value in the process or they think you’re trying to take their budget away.
Financial Modeling in a Static Vs. Active Planning Environment
There are several drawbacks to using a spreadsheet-driven static planning process when creating a financial model.
With static planning, Finance teams deal with issues like:
- Version control: With multiple versions of a spreadsheet being emailed back and forth, it can be impossible to ensure that everyone is working with the same, correct data
- Inefficiency: A manual process takes time and effort to update every time you get feedback, questions, and edits from the CEO, the board, or any stakeholder
- Flexibility: When everything is static, it can be difficult to run what-if scenarios for exploring options
- Trust: Since Finance has complete control of the budget model, business managers aren't invested in the process. As a result, it can be a struggle to get buy-in when it's time to ask them to take action
With active planning, each business owner has the power to model their own area as they see fit.
An active planning approach to financial modeling means:
- An interconnected model: Every line of business is connected, improving visibility and trust in the numbers
- Automatic roll-up: Numbers from all business units are automatically rolled into the broader budget and plan
- Greater accuracy: Data management and consolidation are more efficient, and the accuracy of data is improved
- Understanding the 'why': Finance can better help business owners see and understand how their decisions affect the rest of the company
Incorporate Active Planning into Your Modeling Process
Adaptive Insights makes it simple to conduct a financial modeling process that’s built around collaboration and transparency throughout the company. Because everything is connected in the cloud, every department can see how their budgets will impact both other departments and the bottom line. When everything is connected, you get a single source of insights. Benefits include:
Real-Time Data
See your models adjust to reality in real-time as new information about the business enters the system. Since your data is in the cloud, all of your different department models will be connected in one place instead of across multiple, unconnected spreadsheets.
Visualize Results
Dashboards and data visualization help Finance and non-Finance team members understand the health of their department and the entire company. With business intelligence software, you are able to quickly identify areas of opportunity or concern, and gain a broader business perspective through analytics.
Simplified Collaboration
Finance and each individual department can collaborate on the same financial model instead of emailing spreadsheets back and forth. Seeing an audit trail of which team member made what changes increases transparency and keeps everyone working on the same, up to date model.
Improve Productivity
Everyone can spend their valuable time analyzing the data instead of updating spreadsheets and fixing errors. When everyone is working with the same source data, you can focus your team's time on the story behind the numbers, and create visuals to quickly communicate that story to the rest of the company.